Determination of cost contingency in the procurement of feeder roads in Ghana

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2015-11-16
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Abstract
Among the numerous effects of cost overruns in the construction industry, particularly on public sector projects is the scrutiny of governments and in consequence the limitation of their investment abilities in new projects. Also, drawing on evidence from developed and transition countries, road infrastructure projects have low-cost performance. That is to say, cost overruns are frequently common on road infrastructure projects. Price fluctuation is argued to be a major contributor to cost overruns. The aim of this study was therefore to examine the determination of price contingency in the road construction industry in Ghana, with emphasis on feeder roads contracts. The study utilised a questionnaire survey and review of a dataset of executed projects. Out of the 55 questionnaires administered, 40 were completed and returned. The analysis was consequently based on this response rate. The main findings of the study are: the percentage allocation for DFR projects for price contingency is 10%; and there was association between awareness and usage in terms of the traditional method and other simplistic approaches. However, with the probability methods the proficiency and awareness were unsurprisingly low. There was agreement between the respondents (among the groups) on the significance of almost all the variables. It is recommended that The DFR needs to provide a CPD to improve upon the estimating methods towards more probabilistic approach. This has been found to improve the accuracy of price contingency. The dataset used for the modeling was small and it is expected that an increase in the data may alter the results and improve the accuracy of the model developed in this thesis. Based on the limitation of the study, future study is encouraged to look into especially the modelling aspect of this study involving a large dataset and including more preliminary variables.
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A thesis submitted to the Department of Building Technology, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the Degree of Master of Science in Procurement Management, 2015
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